Court Revives Medicare Suit From Whistleblower

CHICAGO (CN) - A whistleblower who reported her employer for overbilling Medicare on chiropractic services can still pursue her complaint, and collect a tidy finder's fee in the event of a verdict, despite reports of pervasive fraud among chiropractors nationwide, the 7th Circuit ruled.

Kelley Baltazar, a former employee of Advanced Healthcare Associates, alleged that the firm's staff regularly added extra services to billing slips and changed the codes for services that were actually performed, allowing for greater reimbursements. She accused Lillian Warden, the firm's owner, of endorsing the operation in a qui tam suit under the False Claims Act.

The chiropractor had dismissed the suit under the argument that the claims were best brought the United States, eligible for full recovery in the event of a verdict, because qui tam suits cannot be based on public allegations or transactions.

In 2005, the Department of Health and Human Services Office of Inspector General released a report that concluded 57 percent of claims submitted by chiropractors were for services not covered by Medicare, and another 16 percent of services were miscoded.

An Illinois federal judge agreed, finding that such prevalent, publicly documented fraud obligates the United States, not private citizens, to bring the suits.

The 7th Circuit overturned that decision on Feb. 18. Though the report demonstrated industry-wide fraud, its findings were not specific to Advanced Healthcare Associates. Baltazar's claims were based on her own knowledge of the firm's practices, not the report.

"A statement such as 'half of all chiropractors' claims are bogus' does not reveal which half and therefore does not permit suit against any particular medical provider," Chief Judge Frank Easterbrook wrote for the three-judge panel. "It takes a provider-by-provider investigation to locate the wrongdoers."

The Chicago-based court cited similar opinions from the 9th, 10th, 11th, and D.C. circuits.

The court did specify, however, that a qui tam realtor must inform the government of the allegations before filing suit. Baltazar says she complied with this rule by sending a letter, alerting an Assistant U.S. Attorney that a suit was to be filed. The 7th Circuit has reserved deciding whether the letter constitutes sufficient notice.

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